Eversource Energy (d/b/a) · NYSE:ES
Eversource Energy (d/b/a) — Eversource Energy — FY2020 Earnings Presentation
40 slides from Eversource Energy (d/b/a)'s earnings presentation, Feb 16, 2021
Slide 1: 2020 Year-End Investor Call
February 17, 2021 2020 Year - End Investor Call
Slide 2: Safe Harbor Statement
Safe Harbor Statement 1 All per - share amounts in this presentation are reported on a diluted basis. The only common equity securities that are publicly traded are common shares of Eversource Energy. The earnings and EPS of each business do not represent a direct legal interest in the assets and li
Slide 3: Agenda
Agenda Jim Judge Chairman, President & CEO Phil Lembo Executive Vice President and CFO ▪ 2020 – Year In Review ▪ Clean Energy Leadership ▪ Offshore Wind Update ▪ Eversource Gas Company of MA ▪ 2020 Financial Results ▪ 2021 Outlook ▪ 2021 - 2025 Capex and Growth Rate ▪ Regulatory Update 2
Slide 4: Chairman, President & Chief Executive Officer Jim Judge
Chairman, President & Chief Executive Officer Jim Judge 3
Slide 5: 2020 Highlights
4 Operations • Provided safe, reliable electric, natural gas and water service through pandemic and protected our 9,000 employees from workplace COVID transmission • Responded tirelessly to unprecedented storm activity • Completed our $3 billion construction program despite COVID and storm challenge
Slide 6: Operating Performance Remains Strong
Operating Performance Remains Strong SAFETY Injury rate per 100 employees (DART) Average months between interruptions (MBI) System average interruption duration (SAIDI) On - time emergency response GAS RESPONSE ELECTRIC RELIABILITY 2020 Top Decile Among Our Peers 5 64.0 0.7 19.2 99.6%
Slide 7: Eversource's Total Shareholder Return Has Outperformed the Industry
Eversource’s Total Shareholder Return Has Outperformed the Industry Significantly in Both the Short and Long Term 6 Total Shareholder Return 2020 3 - Year 5 - Year 10 - Year Eversource 4.5% 49.4% 96.8% 272.6% EEI 39 - Company Index - 1.2% 28.9% 69.1% 190.0% S&P 500 18.4% 48.9% 103.0% 267.0% Ranking
Slide 8: Dividend Growth Continues to Outperform Peers
Dividend Growth Continues to Outperform Peers 7 Annualized Dividend 5% - 7% $2.02 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 2017 2018 2019 2020 2021 Payout Ratios: 61% 62% 62%* 62%* +$0.12 +$0.12 +$0.12 +$0.13 $2.27 $1.90 $2.14 *Excludes charges related to NPT in 2019 and acquisition of Columbia Gas
Slide 9: Well Performing Core Businesses Drive EPS CAGR to Upper Half of 5–7%
8 Well Performing Core Businesses Drive EPS CAGR to Upper Half of 5 – 7% Through 2025 $2.28 $2.53 $2.65 $2.81 $2.96 $3.11 $3.25 $3.45 $3.64 $3.81 - $3.93 2012A* 2013A* 2014A* 2015A* 2016A 2017A 2018A 2019A* 2020A* 2021E 2022E 2023E 2024E 2025E *Excludes merger and integration costs in 2012 - 2015, N
Slide 10: Eversource's Progress Toward Net Zero Emissions
9 Eversource’s Progress Toward Net Zero Emissions - 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 1990 2014 2015 2016 2017 2018 2019 MT CO 2 e From 1990, we saw a 97% reduction in GHG emissions
Slide 11: Industry Leading Carbon Neutrality Goal Helps the Region Meet Its Targets
Industry Leading Carbon Neutrality Goal Helps the Region Meet Its Targets Eversource Targets Carbon Neutral By 2030 ▪ Reducing electric line loss ▪ Lowering methane emissions from gas distribution system ▪ Fleet replacement ▪ Facility lighting and HVAC upgrades ▪ Replacement of SF6 in substation equ
Slide 12: Expected Timeline For Eversource-Ørsted Projects
Expected Timeline For Eversource - Ørsted Projects 11 Size: • 130 MW Year 1 Price: • ~ $160.33/MWH for 90 MW • ~ $86.25/MWH for 40 MW • (avg. annual escalator: 2%) Contract Status: • Negotiated agreement to increase original 90 MW to 130 MW. NY Comptroller and AG approval required Most Recent In - S
Slide 13: Remaining Lease Capacity Is Well-Positioned To Maintain Disciplined Growth Strategy
12 Remaining Lease Capacity Is Well - Positioned To Maintain Our Disciplined Growth Strategy Eversource & Ørsted Leases 4.7 GW Remaining 1.6 GW Remaining 1.2 GW Remaining 0.6 GW Remaining 0 2 4 6 8 10 NY MA CT RI GW State Offshore Wind Procurement Authority Awarded Authorized
Slide 14: Key Elements of Year-End Federal Legislation Regarding Offshore Wind
Key Elements of Year - End Federal Legislation Regarding Offshore Wind ▪ In December 2020, Congress passed significant offshore wind legislation ▪ Offshore wind projects can now qualify for a 30% ITC value if construction starts on or before 12/31/25 ▪ IRS issued a notice that provides a 10 - year S
Slide 15: Eversource Recognized as the Leading Energy Company
Eversource Recognized as the Leading Energy Company 14 #1 Energy and Utilities Company on Newsweek magazine’s Most Responsible Companies list Top level ESG and ESG risk rating One of only four energy companies on Barron’s Most Sustainable Companies list, based on an evaluation of 230 performance ind
Slide 16: Executive Vice President & Chief Financial Officer Phil Lembo
Executive Vice President & Chief Financial Officer Phil Lembo 15
Slide 17: 2020 vs. 2019 Financial Results
16 4Q 2020 4Q 2019 Change Full Year 2020 Full Year 2019 Change $0.27 $0.28 $(0.01) $1.60 $1.59 $0.01 0.35 0.36 (0.01) 1.48 1.43 0.05 0.18 0.12 0.06 0.40 0.30 0.10 0.02 0.02 0.00 0.12 0.11 0.01 0.03 (0.02) 0.05 0.04 0.02 0.02 $0.85 $0.76 $0.09 $3.64 $3.45 $0.19 0.00 0.00 0.00 0.00 (0.64) 0.64 (0.06)
Slide 18: 2021 EPS Guidance: $3.81-$3.93
2021 EPS Guidance: $3.81 - $3.93* Key 2021 Earnings Drivers • Distribution rate adjustments • Full year of Eversource Gas of MA earnings • Transmission capital investments • Distribution safety and reliability capital recovery tracking programs • Higher depreciation and property taxes • Higher avera
Slide 19: Projected Capital Expenditures For Core Businesses $17 Billion 2021-2025
18 $994 $1,030 $964 $1,065 $915 $853 $761 $711 $1,145 $1,221 $1,189 $1,269 $1,309 $1,353 $1,289 $1,229 $404 $453 $545 $824 $925 $974 $937 $789 $102 $110 $127 $149 $143 $154 $162 $171 $185 $239 $239 $217 $249 $211 $194 $176 $2,830 $3,053 $3,064 $3,524 $3,541 $3,545 $3,343 $3,076 $0 $500 $1,000 $1,500
Slide 20: $2.8 Billion Increase in 2021-2024 Core Business Capex Since February 2020 Plan
19 $2.8 Billion Increase in 2021 - 2024 Core Business Capex Since February 2020 Plan $3,066 $4,774 $2,043 $561 $676 $3,594 $5,220 $3,660 $608 $871 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 Electric Transmission Electric Distribution Natural Gas Distribution Water IT and Facilities Feb. 2020 Plan
Slide 21: Rate Base by Core Business – Current and Future
37% 33% 47% 41% 12% 22% 4% 4% Transmission Electric Distribution Natural Gas Distribution Water 20 2019 Year - End Rate Base Projected 2025 Year - End Rate Base $19.8 billion* $31.3 billion* Rate Base by Core Business – Current and Future Note: Excludes offshore wind investments * Rate base estimate
Slide 22: Key Elements Inside and Outside Our Current Earnings CAGR Expectations
Key Elements Inside and Outside Our Current Earnings CAGR Expectations Included in Forecast ▪ Execution of updated capital investment forecast ▪ Addition of Eversource Gas Company of MA assets ▪ Addition of 280 MW of rate base solar at NSTAR Electric ▪ Continuation of grid mod in MA at current level
Slide 23: Results of 2020 Rate Reviews
22 Results of 2020 Rate Reviews • Effective Date: 1/1/21 • Term: 3 - year rate plan • Authorized ROE: 9.3% • Equity Level: 54.4% • Other: • Additional increases allowed to reflect capital additions in 2019 - 2021 PSNH • Effective Date: 2/1/18 • Term: 10 - year rate plan • Authorized ROE: 9.9% • Equi
Slide 24: FERC Transmission New England ROE Update
23 FERC Transmission New England ROE Update • Current base: 10.57%; Cap: 11.74% (2014 Opinion 531A) • October 2018 FERC Order in New England ROE cases proposed a new methodology to address issues raised by Court in vacating Opinion 531A (New England ROE Complaint I) • This new methodology provided a
Slide 25: A Value Proposition That Delivers Results for Investors
A Value Proposition That Delivers Results for Investors Keys to Our Success: Results Delivered: 2. Control O&M spending Eight - year average O&M reduction 1.5%/year through 2020 (~$190M) 1. Exceed industry EPS and dividend growth Eight - year average recurring EPS and dividend growth of 6% and 7%, r
Slide 26: Appendix
EVERSSURCE ENERGY APPENDIX
Slide 27: Projected Transmission Capital Expenditures
$403 $443 $264 $204 $206 $173 $367 $469 $462 $426 $331 $385 $194 $153 $189 $223 $224 $153 $964 $1,065 $915 $853 $761 $711 $0 $200 $400 $600 $800 $1,000 $1,200 2020A 2021E 2022E 2023E 2024E 2025E CL&P NSTAR Electric PSNH 26 $ in Millions Projected Transmission Capital Expenditures Other concepts unde
Slide 28: Transmission Rate Base Growth Projections
$3,582 $3,863 $3,994 $3,979 $3,972 $3,971 $3,119 $3,434 $3,860 $4,164 $4,342 $4,516 $1,271 $1,381 $1,464 $1,608 $1,742 $1,808 $9,318 $9,752 $10,056 $10,295 $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 2020A 2021E 2022E 2023E 2024E 2025E CL&P NSTAR Electric PSNH 27 $ in Millions Transmission Rate B
Slide 29: Eversource is Integrating the Recently Acquired MA Natural Gas Assets of NiSource
28 Eversource is Integrating the Recently Acquired MA Natural Gas Assets of NiSource ▪ Transaction closed on October 9, 2020 ▪ All - cash $1.1 billion* transaction (1.1x rate base) ▪ 6 million shares sold in June 2020 to finance equity component ▪ Immediately accretive and incrementally accretive ov
Slide 30: Projected Natural Gas Investment 2020-2025
Projected Natural Gas Investment 2020 - 2025 29 $ in Millions $824 $937 $974 $925 $545 $789 $37 $271 $275 $275 $275 $275 $508 $553 $650 $699 $662 $514 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 2020 2021 2022 2023 2024 2025 EGMA All Other Natural Gas Investments
Slide 31: Aquarion Rate Base Forecast
30 $1,114 $1,195 $1,047 2018A 2019A 2020A 2021E 2022E 2023E 2024E 2025E Year - End Rate Base $ in Millions Aquarion Rate Base Forecast $1,283 $1,341 $942 $887 $820
Slide 32: Lower Generation Capacity Costs Helping to Keep New England Electric Bills In Check
Lower Generation Capacity Costs Helping to Keep New England Electric Bills In Check $4,000 $3,000 $2,400 $2,100 $1,600 $980 $1,360 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 FCA 9 FCA 10 FCA 11 FCA 12 FCA 13 FCA 14 FCA 15 June 2021 - May 2022 June 2022 - May 2023 June 2023 - May
Slide 33: Previous Distribution Rate Decisions
32 ▪ Effective Date: 5/1/18 ▪ Term: 3 years ▪ Authorized ROE: 9.25% ▪ Equity Level: 53% ▪ Other: ▪ Base rate increases effective: 5/1/18, 5/1/19, 5/1/20 ▪ Tracking mechanism for capex over $270 million ▪ Effective date: 11/15/18 ▪ Term: 3+ years ▪ Authorized ROE: 9.3% ▪ Equity Level: 53.5% - 54% ▪ O
Slide 34: Connecticut Regulatory Dockets and Schedule
33 Description Docket Number Current Schedule Review of Tropical Storm Isaias 20 - 08 - 03 Draft decision, 3/19/21; Final decision 4/28/21 Annual review of multiple CL&P trackers (RAM) 21 - 01 - 03 CL&P filing of 2020 costs, 3/1/21; Interim decision, 4/28/21; New rates subject to true - up, 5/1/21;
Slide 35: NSTAR Electric Clean Energy and Grid Modernization Initiatives
34 NSTAR Electric Clean Energy and Grid Modernization Initiatives Grid Modernization: • $133 million program for grid facing investments in visibility and automation completed at the end of 2020. In February, DPU approved request for $56 million of additional investment in 2021 • New 2022 - 2024 pla
Slide 36: Key Elements of Eversource's Grid Mod Filing in CT
Key Elements of Eversource’s Grid Mod Filing in CT AMI • Recommend a full rollout to all CL&P customers by the end of 2024 • Significant economic, environmental and operational benefits for the state, 1.25 million CL&P customers • $500 million capital investment from 2022 - 2025 • Most CL&P meters c
Slide 37: Eversource Only US Energy Company Targeting Carbon Neutrality By 2030
36 ▪ In 2019, we announced our industry leading goal to reduce emissions from 5 key operational areas: – Line loss – Leaks from natural gas distribution ( including EGMA) – Vehicle fleet – Facilities – Use of SF 6 , potent greenhouse gas, in electrical equipment Eversource Only US Energy Company Tar
Slide 38: Eversource Addressing Largest Sources of New England Carbon Emissions
Eversource Addressing Largest Sources of New England Carbon Emissions: Transportation, Space Heating and Power Generation 48.1% 36.9% 30.7% 10.4% 15.6% 33.5% 5.6% 19.2% 0% 20% 40% 60% 80% 100% New England U.S. 2017 Energy Carbon Emissions by Source New England vs. U.S. Transportation Space heating P
Slide 39: Most Effective Method of Reducing Emissions: Improve Energy Efficiency
38 Most Effective Method of Reducing Emissions: Improve Energy Efficiency Source: American Council for an Energy - Efficient Economy 2020 Scorecard 16 3 18 2 7 4 Note: The lower the number…the more effective the Energy Efficiency Programs Eversource MA, #1 Most Energy Efficient Utility in the United
Slide 40: Current EV adoption trajectory insufficient to ensure compliance with 2025 target
Current EV adoption trajectory insufficient to ensure compliance with 2025 target EVs on the road in MA/CT MA/CT CO2 emissions by sector (2017) • Ambitious goals set forth in the 2008 Global Warming Solutions Act • MA: Net zero GHG emissions by 2050; CT: Reduce GHG emissions 80% below 1990 levels by